Smaller brands are moving into malls

While small brands are vying for a coveted place in the malls, it is the big retail players who are treading safely. A lot of the retail biggies want to strike a fine balance between opening stand alone stores and presence in malls. Smaller brands are moving in at a fast rate which can result in growing number of mass buyers Property developers view this change as a healthy trend offering varied options Property developers are definitely more cautious these days about putting their money into malls as the big ticket growth sector. The euphoria of 2005-2006 has clearly taken a dip and the signs are beginning to show. An interesting trend is that while more and more small brands are vying for a coveted place in the malls, it is the big retail players who are now carefully watching each step. Aiming to strike a fine balance between opening stand-alone stores and presence in malls, the big brands want to play it safe. So, is it only the smaller brands that are contributing towards growth in mall rentals? While that may not exactly be the case, big players are getting more choosy about setting up shop in the malls as rentals spiral upwards and footfalls go down. Says Shubhranshu Pani, president, retail services, Trammell Crow Meghraj, property consultants, “The mall rentals have increased between 20 and 40% over the last one year. Hence, most brands are being very careful about where they sign up. They are also more choosy now as there are a good number of malls that have come up. Supply is not an issue anymore.” An example of a retail player steering away from the mall format is Pulse Foods India, promoted by the Poddar Heritage group. “We were initially quite focused on malls. But today it makes no sense to open an outlet in a mall. The developers are asking for crazy amounts as rent. The numbers are completely illogical. Stand-alone stores are proving a better option in the given scenario. In fact, we have deferred plans for expansion domestically and are focusing on the international market till rental overheating cools down,” says Neeraj Jain, CEO, Pulse Foods. Retail biggie Pantaloon, though, has a different perspective on the issue. With most of its stores located in malls, the company feels that only a small segment of brands are moving out. “It may be happening in a small way but those complaining are the ones who are finding it difficult to get spaces inside malls. And the fact remains that there is not much space on high streets either. The famous streets are already crowded out. As far as we are concerned, we have got large space requirements and our stores are located 90% in malls,” says Kishore Biyani, CEO, Future Group. Some players attribute such decisions to a company-specific strategy. Essar Telecom Retail, for instance, which has 30 of its 200 stores located in malls and the rest at high streets. “Ultimately it depends upon the strategy of a company. Our own strategy is to locate stores where our customers are. They buy from everywhere and we also want to bring convenience by locating ourselves near them. Many offices are locate in CP, for instance, while others are Gurgaon or Noida - we want to be at all these places.”